The True Cost of the Bank Bailout

THE TRUE COST OF THE BANK BAILOUT

The Troubled Asset Relief Program is nothing new.  TARP spent $700 billion in taxpayers’ money to bail out banks after the financial crisis. That money was scrutinized by Congress and the media.

What isn't as widely know is that the $700 billion is just a small part of a much larger pool of money that has gone into propping up our nation’s financial system. Most of that taxpayer money hasn’t had much public scrutiny at all.

According to a team at Bloomberg News, at one point last year the U.S. had lent, spent or guaranteed as much as $12.8 trillion to rescue the economy. The Bloomberg reporters have been following that money. Alison Stewart spoke with one, Bob Ivry, to talk about the true cost to the taxpayer of the Wall Street bailout.

THE LEGALITY OF THE BAILOUT

The historic financial bailouts of 2008 and 2009 may have been necessary, but experts are now rethinking whether they were legal, according to a commentary in today's Wall Street Journal. None of those extraordinary turning points—from the frantic American International Group rescue to the government's takeover of General Motors—has since faced constitutional review in the way, say, Guantanamo Bay detention cases have. Two years on, however, constitutional scholars are re-examining those fretful days, taking on the questions that went ignored in the frenzy to avert financial calamity. Their consensus: the Troubled Asset Relief Program, which sprayed some $475 billion into banks and finance companies, could stand up to the ghosts of Jefferson, Madison and Hamilton. The bailouts of GM and Chrysler, however, largely failed the constitutional test, said a number of scholars from across the political spectrum. They simply "were not plausible" under the law, according to one constitutional scholar, University of Virginia's Saikrishna Prakash.


The historic financial bailouts of 2008 and 2009 may have been necessary. But were they legal?

Deputy Money & Investing editor Dennis Berman discusses with WSJ's Evan Newmark the finding of a constitutional scholars who concluded that TARP was indeed legal, whether you agree or not that it was the right response.

We'll never really know; none of those extraordinary turning points—from the franticAmerican International Group rescue to the government's takeover of General Motors—has since faced constitutional review in the way, say, Guantanamo Bay terrorist cases have.

Two years on, however, constitutional scholars are re-examining those fretful days, taking on the questions that went unasked or ignored in the frenzy to avert financial calamity.

Their consensus: the Troubled Asset Relief Program, which sprayed some $475 billion into banks and finance companies, could stand up to the ghosts of Jefferson, Madison and Hamilton. The bailouts of GM and Chrysler, however, largely failed the constitutional test, said a number of scholars from across the political spectrum. They simply "were not plausible" under the law, according to one conservative scholar, University of Virginia's Saikrishna Prakash.

This is no academic matter. The limits of government intervention were supposed to be set by the passage of the Dodd-Frank Act, which provides a step-by-step guide for euthanizing sick financial institutions. Yet the next crisis will likely be something the 2010 Congress couldn't foresee. Just how tight is it willing to tie a president's hands? Thomas Jefferson himself noted that "to lose our country by a scrupulous adherence to the written law would be to lose the law itself..."

Associated Press

Speaking at a Senate hearing on the auto industry in December 2008, from left, General Motors' Richard Wagoner, auto workers' leader Ron Gettelfinger, Ford's Alan Mulally and Chrysler's Robert Nardelli.

In that spirit, the often ham-fisted responses of Presidents Bush and Obama largely fell within a president's emergency powers, said constitutional experts who convened at a Stanford Law School conference about the constitution and bailouts, the first of its kind. Intriguingly, former Treasury Secretary Hank Paulson's first draft of the $700 billion TARP bailout fund may have violated the constitution. Written in just a few pages, it appeared to give away too much spending power from Congress to the White House, said Mariano-Florentino Cuéllar, a Stanford Law professor. Congress voted down Mr. Paulson's original version and eventually crafted the slim TARP proposal into a 157-page law instead.

The TARP law still gave the Treasury sweeping powers to dole out bailout funds. Those powers would be difficult to grant in today's political climate, especially when the likes of Sarah Palin deride it for "morphing into crony capitalism at its worst."

Rash presidential responses are "somewhat inevitable, and part of the structure of the executive branch to respond more quickly" than Congress, said Gillian Metzger, a Columbia University law professor at the Stanford conference.

Even Prof. Metzger seemed skeptical of the U.S. involvement in another controversial constitutional issue: the GM and Chrysler rescues. Begun with short-term loans by President Bush, they were formed into full-fledged TARP bailouts in early 2009, eventually totaling nearly $80 billion in assistance for the car companies and related finance arms.

That assistance was originally designated by Congress to go to "financial institutions" as "established and regulated" under U.S. law. The law makes express mention of banks, credit unions, insurers and broker-dealers.

It doesn't, however, come close to naming industrial companies as beneficiaries. And that appeared to make it a different matter for Prof. Metzger, who wondered aloud about the legality of instances when "the executive branch engages in aggressive interpretation of statutory authority in ways that Congress prohibited."

Prof. Prakash said the auto bailouts were illegal, arguing that the Bush and Obama administrations said TARP didn't cover autos "until they decided they did." It is one thing to broadly interpret an emergency, another to violate specific language. "There is no suggestion that you can bail out any institution in the nation just because you've got the word 'institution' in the language," Prof. Prakash said. Some Chrysler creditors tried to bring a case to the Supreme Court, arguing that the car maker's government-controlled bankruptcy subverted the usual bankruptcy rules. The court declined to hear the case.

That was the best chance we had for judging tough legal issues around the government's financial-crisis response. Until an issue gets to the courts, we may find that what is legal may simply be what government can get away with.

PAYMENT PROBLEMS TO DROP SHARPLY IN 2011

PAYMENT PROBLEMS TO DROP SHARPLY IN 2011

If the economy slowly improves next year, consumers are expected to get better control on their mortgage and credit card payments. Credit reporting agency TransUnion predicts that delinquencies, or late payments, on the two biggest major forms of borrowing will drop sharply again in 2011, after substantial declines seen in the second half of this year. More homeowners in every state and the District of Columbia will get current on mortgage payments, according to a forecast from the Chicago-based company. TransUnion said that by the end of 2011, it expects that just 4.98 percent of mortgages will be 60 days or more behind. The mortgage delinquency rate peaked at 7.89 percent in the fourth quarter of 2009. The prediction is still well above the 1.5 to 2 percent delinquency rate considered "normal" for mortgages.

"We're actually still significantly higher than where we'd like to be," said Steve Chaouki, group vice president in TransUnion's financial services group. Nevertheless, the figure forecasts substantial improvement, reflecting expected stabilization in the housing market and a slowly improving unemployment picture.

Another reason for the expected gains is that many of the properties where homeowners have problems making their payments have already worked through the system.

Late payments on credit cards didn't skyrocket the way mortgages did during the recession, in part because card users were careful to keep payments current so their credit lines didn't get shut down, said Ezra Becker, vice president of research and consulting for TransUnion financial services. But problem payments did increase and banks had to write off billions in balances they were unable to collect.

Delinquency rates have already dropped dramatically since their recent peak in the first quarter of 2009, when about 1.21 percent of all cards were 90 days or more past due. Already at their lowest rate in more than five years, TransUnion expects card delinquency to drop to 0.75 percent by the end of 2010.

As consumers continue to be careful about how they use credit cards in 2011, TransUnion expects that rate to drop even further, ending the year around 0.67 percent of all balances.

Along with more careful spending, stricter lending standards are playing a role in keeping card payments on time. More than 8 million consumers have dropped off the credit card rolls in the past year, many because their cards were cut off by banks. With tighter lending standards and stricter regulations in place, banks are less likely to open new accounts these days for people who have troubled credit histories, Becker noted.

"Lenders have stopped lending to riskier people, and they've avoided delinquency," Becker said.

BofA CEO Says It Has Moved Salespeople to Modify Mortgages

Bank of America Corp. says it has reassigned salespeople to modify mortgages for struggling borrowers.  This may pressure the revenue of BofA, the largest U.S. lender by assets.

“We have recently moved a couple more thousand people from our sales side, our centralized sales group, over to our servicing areas,” Chief Executive Officer Brian T. Moynihan said at an investor conference today in New York. “In addition, we continue to hire externally. Thereby we have elevated costs in this platform. These costs will stay elevated for the next several quarters and may impact our market-share momentum.”

Bank of America modified about 25,000 mortgages in October, a 52 percent increase from the previous month, the Charlotte, North Carolina-based company said Nov. 18. A U.S. unemployment rate near 10 percent is forcing borrowers to miss payments, and regulators pressured lenders to minimize foreclosures.

“If the borrower qualifies for either a private modification or a government modification, then we complete that,” Moynihan said. When that’s not possible, the bank forecloses. “All of this work is requiring more associates, more teammates,” he said.

Bank of America, with 284,000 full-time workers at the end of 2009, employed more than 26,000 “helping customers who are delinquent,”Barbara Desoer, president of the firm’s home-loan and insurance unit, said at a Nov. 16 congressional hearing.

“We’re completing permanent modifications at a rate of no one else in the industry,” Moynihan said.

New Hires

The company will also add employees in its wealth management and corporate investment banking units, while reducing headcount in technology and operations, he said.

Bank of America posted three unprofitable quarters since the beginning of 2009 as new regulations pressured fee income and borrowers fell behind on loans. The company, which cut its quarterly dividend to a penny a share in 2009, will boost the payout “as fast as we can,” Moynihan, 51, said today.

Asked if he could increase the payout next year, Moynihan responded, “I don’t see anything that would stop us.”

The lender slipped 6 cents to $11.58 at 10:44 a.m. in New York Stock Exchange composite trading. The company has dropped about 23 percent this year
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Leaving After a Foreclosure

Leaving After a Foreclosure


Leaving a house after foreclosure is often the most difficult part of the entire process. Homeowners are often disappointed that they will not be able to keep their home, and some attempt to take revenge on the bank by stripping the property of everything useful. This is not a positive action, though, and serves no lasting purpose other than lashing out at a bank that foreclosed on one's property. But foreclosure victims do still have rights to their own property located in the house, and can take anything that is personal. Fixtures that are attached to the property and considered real property are the most likely targets of being removed from the house and causing damage. While homeowners do not have a right to remove fixtures and leave nothing in their places, they can provide substitute fixtures while taking the items that hold sentimental or financial value to them.

If you have lost your home to foreclosure, you may also be wondering what is going to happen next.  After the foreclosure sale, the new owner will serve you with a Notice to Quit if you are still in the property. It is a 3-day notice if you are the former owner(s) and a 30-day notice if you are a tenant of the former owner(s).

If you still have not left after the expiration of the notice period, the new owner can file an eviction lawsuit against you to get and order for the Sheriff to remove you. Eviction lawsuits can take a couple of weeks or longer depending on the particular aspect of the case.

Contact Your President - Participate in Democracy

We believe that it is important for every citizen to be in contact with their elected officials. They need to hear from you.

President Obama has said that he begins each day in the White House reading a few letters from citizens so he can remember who he is working for. We have heard that as few as 20 letters to a member of Congress on a single topic alerts them as to a potential problem and may cause them to look into that particular issue . This is why we have included this page on our site.

It is easy to write your representatives using these links. Write them and let them know what is on your mind. Of course, your comments should be serious and, again of course, not threatening.

Just let them know. Participate in your democracy.

• House of Representatives:https://writerep.house.gov/writerep/welcome.shtml
• Senate:http://www.senate.gov/general/contact_information/senators_cfm.cfm
• President: http://www.whitehouse.gov/contact/ 

Should Christians File for Bankruptcy?

Should Christians File for Bankruptcy? 

I am often asked what the Bible says about Christians filing for bankruptcy and it a serious spiritual struggle for many. Christians often struggle with feelings of guilt that creditors will not be repaid. Others feel that they have failed God by not being good stewards with their money. Others believe that the Bible condemns bankruptcy. I found answers to many of these questions is an excellent article written by Matthew B. Tozer, Esq. and Ben E. Lofstedt, Esq.

The authors begin with the premise the Bible expressly grants permission for Christians to file bankruptcy: "At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD's release" (Deuteronomy 15:1-2).

They go on to discuss a number of Old Testament and New Testament passages that discuss concepts of sin, mercy, forgiveness, and equity. The authors ultimately conclude, correctly I believe, that bankruptcy is biblical and spiritually available to Christians. However, the ultimate decision to file for bankruptcy and the type of bankruptcy to file must still be made after prayerful consideration seeking guidance from God regarding what decision he would have you make.

Although the subject does not always come up with our clients, we are a Christian law firm. We are a bankruptcy and debt relief agency. We help people file for bankruptcy. We are sensitive to the Biblical and spiritual issues implicated by filing for bankruptcy. Please contact us if you need further assistance is making the decision to file bankruptcy

RI bankruptcy court foreclosure mediation role praised

RI bankruptcy court foreclosure mediation role praised 12:24 PM Thu, Oct 28, 2010

PROVIDENCE, R.I. -- For close to a year, the U.S. Bankruptcy Court in Rhode Island has overseen loan modification agreements that helped homeowners avoid foreclosure, but Deutsche Bank is now challenging the authority of the court to conduct its loss-mitigation mediation program, according to U.S. Sen. Sheldon Whitehouse, D-RI.

Whitehouse criticized the bank's action Thursday at Rhode Island Housing's downtown office, where he led a hearing of the Senate Judiciary Committee's Subcommittee on Administrative Oversight and the Courts.

Whitehouse, who last year proposed giving bankruptcy court judges the power to reduce the principal on primary residence mortgages -- an idea that "the large banks have fought against... with their full lobbying might," said that since that proposal failed, "the foreclosure crisis has not relented in Rhode Island or across the nation."

The hearing, which was also attended by U.S. Sen. Jack Reed, D-R.I., included testimony from two Rhode Island homeowners, Robert Cardullo, of Johnston, and Larry Britt, of Riverside, Judge Martin Glenn, a bankruptcy judge in the Southern District of New York, John Rao, of Newport, an lawyer with the National Consumer Law Center in Boston, and Chris Lefebvre, a Pawtucket lawyer and a member of the debtor/creditor committee of the Rhode Island Bar Association.

In reversal, judge adds Bank of America to fraud case

In reversal,  judge adds Bank of America to fraud case

Saturday, October 9, 2010

A clandestine meeting in a North Carolina hot tub sparked events that led a federal judge in Alexandria to reverse himself Friday, and order Bank of America into a massive real estate fraud case.
The judge previously ruled that the bank should not be a defendant.
The extraordinary ruling by U.S. District Judge Gerald Bruce Lee was a victory for dozens of Fairfax County schoolteachers and administrators, and hundreds of other investors who say they were sold overpriced, vacant lots in North Carolina that later plunged in value from as much as $400,000 to about $20,000 each.
In 2006, the plaintiffs - 129 who sued in federal court in Virginia, and 285 who sued in North Carolina - bought land in two developments in North Carolina being marketed by Total Realty Management, a Woodbridge firm run by Mark Dain and Mark Jalajel. They allege that Dain assured them they could buy the lots with no money down and make no payments for two years, and in the meantime flip the properties for certain profit.
Because TRM was buying the lots for about $150,000 and reselling them immediately for $300,000 or more, the plaintiffs said that TRM couldn't have done it without the help of banks such as Bank of America. They said in court papers that TRM and the banks colluded to inflate the appraised values of the properties, in part by getting second and third appraisals when original appraisals were too low for the sale prices TRM wanted.
In August 2009, Lee dismissed the banks as defendants in the Northern Virginia case, saying there was no evidence or reasons that the banks would issue overpriced loans to people who couldn't afford them.
That's where the hot tub comes in.
In March, after Lee's ruling, a lawyer in the North Carolina case obtained more than 700 pages of e-mails that hadn't been turned over in the Virginia case, during a meeting held in a hot tub so no one could wear a hidden tape recorder, court records state. The e-mails showed a Bank of America loan officer discussing the "recovery appraisals" with Dain and also with Mace Watts, who represented R.A. North Development.
In one case, plaintiffs lawyer Martin C. Conway said Friday, TRM wanted to sell a lot to a Northern Virginia woman for $380,000. But the e-mails showed that Bank of America's first appraiser valued the lot at only $210,000. A second appraisal came in at $220,000. Finally, a third appraisal for the same lot came in at $385,000, and the loan was approved.
"Obviously," the judge said, "these are material to this case and should have been produced in this case, before I spent all this time doing the order."
The judge turned to Andrew J. Trask, Bank of America's lawyer, and said, "What in the world happened here? Why weren't these documents produced?"
Trask said "none of them originated out of Bank of America," and that the judge had dismissed the bank from the case before it had to turn them over.
"It's my fault," the judge said. "I was moving too fast."
Although the buyers in Northern Virginia couldn't afford the loans, and never spoke to the bank - TRM handled all the paperwork, and one of its officers has pleaded guilty to falsifying loan applications - the loan officers stood to profit personally by taking commissions on every loan that was made, Conway said. TRM also made two years' worth of payments to the banks on the interest-only loans, which lawyers said came from TRM's profits.
Lee also noted that Bank of America had obtained mortgage insurance for the loans, which could have provided the bank with a safety net - except that the insurance company later canceled many of the policies because of "misrepresentation" by the bank. The judge also took notice that TRM officer Cari Deuterman, and former TRM employee Aaron Hernandez, have pleaded guilty to bank fraud.
Lee gave the plaintiffs permission to refile their case against Bank of America with the new evidence, but he said "the issue of plausibility still remains. What did the bank have to gain by entering into fraudulent loans?" The case against the TRM defendants is on hold while they are in bankruptcy proceedings.
A number of the plaintiffs were present and applauded Lee's ruling. "I'm extremely happy," said Craig Hanford of Fairfax. "All I want is my day in court and this allows us to get there."

Bank of America halts all foreclosure sales

October 8, 2010: 6:51 PM ET

NEW YORK -- Bank of America is halting foreclosure sales in all 50 states as part of a widening investigation into flaws in the process, the company announced Friday.
The announcement came a week after the nation's largest bank said it was freezing home foreclosures in 23 states where foreclosures must be approved by the courts.
The bank said the foreclosure process on delinquent borrowers will continue, but it will not proceed to judgment or a foreclosure sale.
"We haven't found any problems in the foreclosure process," Bank of America (BAC, Fortune 500) President and CEO Brian Moynihan said in an appearance before the National Press Club in Washington. "What we are trying to do is clear the air, and say 'We will go back and check our work one more time.' "
The review process is likely to last a few weeks, Moynihan said.
Bank of America is not the only bank to freeze foreclosures.
PNC Financial Services Group also suspended sales of foreclosed homes on Friday, for a term of 30 days, according to media reports.

Freezing foreclosures? What does that mean?

Frederick Solomon, a spokesman for PNC, declined to comment beyond saying that "PNC is reviewing its mortgage servicing procedures to make sure they comply with applicable legal requirements."
JPMorgan Chase (JPM, Fortune 500) announced last week that it will also halt proceedings for about 56,000 homeowners after learning that its employees may have approved foreclosures without personally reviewing loan files.
JPMorgan Chase had no comment on Friday's announcement by Bank of America.
Ally Financial, previously known as GMAC, the finance arm of General Motors, has also paused foreclosures in the 23 states.
However, Citigroup said it is making no changes in its foreclosure procedures. "At this point, we have no reason to believe our employees haven't been following our procedures, so we do not believe a suspension is necessary," spokesman Mark Rodgers said in an e-mailed statement.
State attorneys general have stepped up pressure on banks in recent days after it was revealed that some bank employees had signed foreclosure affidavits without verifying that the documents were accurate, a process now known as "robo-signing."
Ohio's attorney general has filed a lawsuit against Ally Financial and its subsidiary GMAC Mortgage for allegedly submitting fraudulent documents in hundreds of foreclosure cases across the state.

Foreclosure freeze shakes battered home market

Ally declined to comment Friday when asked if they would follow Bank of America and expand their freeze.
Senate Majority Leader Harry Reid, D-Nevada, called on major mortgage servicers to consider halting foreclosures in all fifty states in a statement released Friday.
"It is only fair to Nevada home owners to suspend foreclosures until a thorough review of foreclosure processes is completed and home owners can be assured that their documents are being analyzed properly," said Reid.
Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee, announced Friday that he will hold a hearing to investigate allegations of improper mortgage servicing and foreclosure processing on Nov. 16, the day after the Senate returns from recess.
On Thursday, the White House said that President Obama won't sign a bill that could have made it easier for courts to clear foreclosures. The bill would have required federal and state courts to recognize documents that were notarized in other states. 

Eight steps for a Christian to take when deciding if bankruptcy is your best available alternative

Eight steps for a Christian to take when deciding if bankruptcy is your best available alternative


Bankruptcy is never an ideal, but in some cases is a best available alternative.  Many Christians are finding  that bankruptcy is currently their best available alternative.  Personally, I believe bankruptcy at times is the best available alternative.  Remember, there are financial implications.  A Chapter 7 bankruptcy may remain on your credit bureau report for 10 years. A Chapter 13 may stay for 10 years also, but it is typically removed after  7 years.  There are emotional implications.  People who declare bankruptcy feel remorse, loss, and isolation.  There are relational implications.  There are spiritual implications.

Eight steps to take when deciding if bankruptcy is your best available alternative

1. Discuss the situation openly with your church leaders.

   Depending on you church structure that might be a pastor, minister, elder, or deacon.  In the conversation, openly disclose the pertinent details about your financial situation.  This discussion can be useful for three reasons.  First, your church leader may be able to provide some spiritual and biblical perspective on the situation.  Tell the church leader you want to be sure you completely understand what the Bible says about bankruptcy.  Second, the church might be able to provide some financial assistance if it appears the bankruptcy could be avoided with some help.  Third, the church leader may be able to refer you to a Christian financial professional who can assist you.

2. Keep Everything in Perspective.

   A bankruptcy can consume you financially, emotionally, and relationally.  Seek to ensure that your family and your home is not destroyed in the process.  Embrace those who are important to you.  Cling to your relationship with God.  Keep some energy to invest in your family.

3. Pursue every available alternative with your creditor.

   Bankruptcy is the result of a two party relationship gone bad.  The first is a shortage of cash on your part, and the second is an inability to compromise on the part of the creditor.  In your discussions with your creditor, be truthful and factual.  Let them know what you do have, what you can do, and the implications if they do not work with you.  They want you to avoid bankruptcy as much as anyone because if you declare bankruptcy they don’t get paid.  Frequently ask, “What are my options”?

4. Postpone speaking to a lawyer for as long as possible.

   Do you think it is in the best interest of the bankruptcy lawyer to advise you against bankruptcy?  No.  They will offer you a sales pitch, not advice.  By the way, if it does become necessary to find a lawyer, find someone who can offer a referral.

5. Seek the most ethical form of bankruptcy.

   For example, a chapter 13 bankruptcy will allow you to set new repayment plans with your creditors.  In a chapter 7 bankruptcy you give up your rights to what you own (with expectations).  Even during this stage of bankruptcy consider what you can financially do, but also what is best for those who loaned you money in good faith.

6. Learn your lesson.

   If it is necessary for you to go through a bankruptcy, consider it as the greatest learning opportunity of your life.  The bankruptcy was the result of a broken system.  If that system remains broken then bankruptcy will once again be in your future.  Be sure you can answer the following questions: Why did I go into debt? What needs to change this second time to be sure it never happens again?

7. Commit to learn everything you can about personal finances.

   This is much like #5, but number five only deals with what you already know.  However, for there to be a real change you need to add some fresh material to how you think about money.  There are a number of great personal finance blogs written from a Christian perspective.  There are some wonderful books written on personal finances.  If you are not much of a reader, consider listening to shows on personal finances.  Regardless of how you learn, the important thing is to learn some new things about personal finances.

8. Make restoration in the future, if possible.

   If the bankruptcy allows you to pull out of a current financial slump and your financial situation improves I would suggest you do go back and contact those creditors and pay them back.  You may have absolutely no legal requirement (depending on the specifics of your bankruptcy) to this, but morally you still have an obligation when you are able to repay.

While bankruptcy is never a good thing there are situations where it is the best available alternative.

Do I Need An Attorney To File Bankruptcy?

Do I Need An Attorney To File Bankruptcy?

Do you need an attorney to file bankruptcy?

If you are an individual, technically, no.

Is it a good idea to file a bankruptcy case without an attorney?

No.

Why?

Because bankruptcy law is hard. It is full of arbitrary rules, complex procedures, and odd results.

I have been practicing restructuring law almost exclusively for fourteen years. Have you heard of the 10,000-hour rule and how it takes about 10,000 hours to become and expert in something? I probably am in my fourth set of 10,000 hours. And I still learn something new about bankruptcy law most days. Even the brightest of folks cannot get up to speed on bankruptcy law in one case. So you probably shouldn't try it. 

What will happen if you file your own bankruptcy without an attorney?

Maybe nothing. Maybe you'll still get your discharge and everything will be fine.

Or maybe you won't know which assets are exempt, not schedule them properly, and have the trustee try to take something you could keep.

Or maybe you'll omit a creditor and not have that debt discharged.

Or maybe you'll omit an asset and have the trustee bring an action to deny your discharge. If that action succeeds, you face the prospect of having your debts become permanently barred from discharge. That's a very high price to pay.

Under current bankruptcy law, you are eligible for a chapter 7 discharge only once about every eight years. That's a long time between bites at the apple.

If you enjoy risk and won't mind if you don't get your debts discharged, feel free to try to file your case by yourself. Otherwise, call an experienced, competent bankruptcy attorney.

30-Year Mortgage Rate Sinks To 4.32 Percent

Associated Press

10/01/10

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Rates on 30-year mortgages have matched the lowest level in decades, while rates on 15-year loans dropped to their lowest point in nearly 20 years.
Yesterday, mortgage buyer Freddie Mac said the average rate for 30-year fixed loans fell to 4.32 percent, the lowest on records dating back to 1971. That's down from 4.37 percent the previous week.
The average rate on 15-year fixed loans fell to 3.75 percent, the lowest on records dating back to 1991.
Rates have been at or near the lowest levels in decades since spring as investors poured money into the safety of Treasury bonds, lowering their yield.
Also, Congress has extended a policy that allows homeowners in pricey real estate markets to secure government-backed mortgages of nearly $730,000.
Lawmakers voted to keep the maximum size of loans guaranteed by Fannie Mae and Freddie and the Federal Housing Administration at the current level through the end of 2011.

Webster Bank To Pay $2.8M To Settle Overdraft Fees Lawsuit

09/30/10

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Waterbury, Conn.-based Webster Bank, which has a presence in the Bay State, has agreed to pay $2.8 million to settle a class-action lawsuit alleging it improperly assessed and collected overdraft fees from checking account customers.
In the lawsuit, the bank is charged with manipulating customers' checking account debits, according to reports. This alleged action would have allowed the bank to maximize the number of overdraft fees it could charge.
Webster Bank is said to have accomplished this by posting checks and ATM withdrawals out of the order they are received. The bank allegedly posted the largest withdrawals first in order to drain the account balance, according to reports.
Webster Bank said it "continues to believe its practices were both proper and lawful," according to a written statement. The bank opted to pay the $2.8 million settlement to "fully and finally to resolve the litigation and avoid any further expense and distraction occasioned" by the lawsuit.
The settlement is subject to approval by the U.S. District Court for the District of Connecticut and would also resolve a similar class-action lawsuit pending against the bank in New York, Webster said.

Analysis: Foreclosure "Mess" Unfolds State By State

09/30/10

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An outcry over questionable foreclosures by GMAC Mortgage and other lenders is likely to hit some states more than others because of major differences in real estate law across the nation.
But ramifications for federal taxpayers and investors will depend on the costs of clearing up the problem, the latest fallout from the bursting of the nation's real estate bubble.
GMAC Mortgage announced last week that it had suspended evictions and post-foreclosure closings in 23 states due to concerns over paperwork. In order for a lender to foreclose on a property, it must prove that it actually checked the borrower's loan agreements, and that the homeowner defaulted.
But the unit of Ally Financial, which is 56.3 percent owned by the federal government after a $17 billion bailout, said employees preparing foreclosures had submitted affidavits to judges containing information they did not personally verify.
"It's a real mess," said Justice Arthur Schack, a jurist on foreclosure issues who sits on the New York State Supreme Court in Brooklyn.
GMAC's announcement has raised doubts about whether some people lost their homes without good reason. Attorneys general in several states, including California, Colorado, Illinois and Ohio, are investigating.
"The law demands that lenders prove their case in foreclosure actions," Illinois Attorney General Lisa Madigan said last week.
But Ally characterizes the problem as merely technical, arguing that the underlying facts in each foreclosure are accurate.
"We are confident that the processing errors did not result in any inappropriate foreclosures," it said in a statement last week.
GMAC landed in its predicament after one of its employees testified in a December 2009 deposition that he signed off on tens of thousands of affidavits containing information he did not verify.
The company said it has "substantially increased" the number of employees to verify documents, provided additional training, and suspended evictions out of an "abundance of caution."
Ally isn't the only firm under the microscope.
JPMorgan Chase & Co is delaying its current foreclosure proceedings and has begun to systematically re-examine related documents after discovering that some employees may have signed affidavits in some cases without personally reviewing the files.
Lawyers in Florida are questioning JPMorgan's practices after discovering one of its executives did not check the details of its claims against a homeowner.
The executive said she had been part of an eight-person team that signs 18,000 documents a month.
Paul Miller, an analyst at FBR Capital Markets, said he didn't think the foreclosure problems were material enough to impact the timing of any initial public offering that Ally has said it was considering.
Ally spokeswoman Gina Proia said the company does not anticipate a "significant adverse affect" related to the document issues.
But last week Moody's said it may cut some GMAC ratings because case resolutions could take longer than expected, which could mean higher costs for borrowing by Ally.
And Miller said he expects more damaging disclosures across the industry.
"This will have big time legal ramifications throughout the foreclosure market," he said.
Judges across the country have been skeptical about homeowner challenges based on arguments that loans were improperly securitized, said O. Max Gardner III, a bankruptcy lawyer in North Carolina.
But evidence of false affidavits might hit closer to home for judges, Gardner said.
"When you're talking about somebody submitting just a false document to the court, knowing it was false, that is something that any judge can understand," Gardner said.
However, states regulate foreclosures in very different ways.
In some, like New York, judges sign off on foreclosure orders. That gives homeowners an automatic courtroom session to air any complaints, making it easier for document problems to gum up foreclosure proceedings.
But other states hard hit by the housing market collapse, such as California, require homeowners to initiate their own separate legal proceeding to raise problems with their documents, an extra hoop which could dampen the impact of problems.
"In California this has been a huge uphill fight," said Walter Hackett, an attorney who represents homeowners in the Golden State.

August Bay State Home Sales Drop To Lowest Level In Two Decades

Single-Family Home Sales Decline 18 Percent, Prices Creep Up

09/28/10

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To hear The Warren Group CEO Timothy Warren Jr. explain the low number of home sales, click here.

Sales of Massachusetts single-family homes in August plummeted to their lowest level in more than two decades, according to the latest report by The Warren Group, publisher of Banker & Tradesman.
A total of 3,659 single-family homes sold in Massachusetts in August, an 18.5 percent drop from 4,492 sales in August 2009. It represented the second consecutive month of year-over-year sales declines. This is the first time sales have fallen below 4,000 in the month of August since The Warren Group began tracking data in 1987. Prior to last month, the lowest number of single-family home sales tracked in August was 4,100 in 1990.
Sales of single-family homes edged up from a month ago, when there were 3,590 sales of single-family homes. Year-to-date sales climbed 9.35 percent to 28,567, up from 26,124 a year ago.
"Sales volume in the real estate market remains slow as an after-effect of the expiration of the popular tax credit for homebuyers. Anxiety and uncertainty in the minds of consumers regarding rising foreclosures, the economy, jobs and financial markets all played a role in keeping potential homebuyers on the sidelines this summer," said The Warren Group CEO Timothy M. Warren Jr. "I'm afraid that the slumping real estate market led the country into the recession and the market's continuing malaise is holding back any kind of strong economic recovery."
Year-to-date sales were up in every county.
The median price of single-family homes crept up 3.9 percent to $315,000 in August, up from $303,000 a year earlier. Median prices of single-family homes in Massachusetts dropped from a month ago, when the median price was $320,000. August marked the third straight month of the year that the median price exceeded $300,000. The median price for homes sold January through August was $300,000, up almost 5.26 percent from $285,000 in the prior year.
In August, condominium sales also dropped in the Bay State, declining 23.3 percent from a year earlier. A total of 1,620 condos sold in August, down from 2,113 a year ago.
Year-to-date condo sales were up 9 percent, increasing to 12,830 from 11,764 during the same period last year.
Condo sales increased slightly from a month earlier, when 1,482 condos sold in Massachusetts.
The median condo price also increased in August. The median selling price was $298,500, up 8.5 percent from $275,000 a year earlier. The year-to-date median price of condos in the Bay State is $266,000, up 3.5 percent from $257,000 a year ago.